Decline of Call Center Service

I am reprinting the following from the Peppers & Rogers "1to1 Weekly," June 30, 2008 --

THE DECLINE OF CALL CENTER SERVICE
By Kevin Zimmerman, Senior Editor

The 10th annual "Call Center Benchmarking Report" from Dimension Data paints a somewhat negative picture of where that industry segment seems to be headed -- though not everyone agrees about what the survey's implications are.

Dimension Data surveyed 300 call centers in 36 countries across five continents. The research shows that from 1997 to 2007, key performance metrics indicate a significant deterioration of quality of service in contact centers. Call abandon rates, due to long hold times, increased during the 10-year period by nearly 127 percent, while the average time to answer a call rose by some 70 percent, from 23 to 39 seconds.

In addition, the percentage of calls that were answered in less than 10 seconds decreased by nearly 12 percent from 72 percent of all calls to 64 percent, while callers on average abandoned a call after waiting for 45 seconds in 2007, compared to 53 seconds in 1997.

Steve Loring, business development manager for customer interactive solutions at Dimension Data, attributes these performance drops to changes in the market and customer service dynamic over the past 10 years.

"The access of information is more of an open commodity now," Loring says, citing increased competition between businesses and the array of channels with which customers and businesses can interact (email, Web, phone) as factors that have made customer interaction much more complex.

"There has also obviously been a move toward more self-service," he adds. "A customer faced with being on hold may abandon the call and try to solve the problem on his own."

The report also states that contact centers are finding it increasingly difficult to retain employees. During the 10-year period, annual agent attrition rate rose by nearly 93 percent, increasing from 14 percent to 27 percent.

Loring maintains that the difficulty in retaining employees could be related to the increased outsourcing of agent seats. The survey found a 220 percent increase in outsourcing, with 16 percent of agent seats outsourced in 2007 compared to 5 percent in 1997.

"If you were to ask me to guess what the outsourcing rate was, I'd never guess a number as low as 16 percent," avers Peppers & Rogers Group cofounder Martha Rogers, Ph.D. "So while, yes, it's an increase of 220 percent from 10 years ago, it's kind of: so what? That's still a surprisingly tiny percentage."

Strategic issues behind the numbers
Nevertheless, Rogers says, the issue remains an important one. "At the heart of the problems we see at call centers is that they're hiring the wrong people or they're not doing the right things to keep them," she says. "They've created cultures that are basically sweat shops, where people who can do anything else, will. They view it as a temporary place to make money until they can get a 'real' job. So you're putting your customer relations in the hands of people who just want to get out."

Ian Jacobs, senior analyst at Frost & Sullivan, adds that the same situation is now being repeated in call center hubs like India and the Philippines. "Ten years ago being a call center rep was viewed as a career, but that's no longer the case," he says. "Countries with maturing outsourcing operations are seeing an explosion in turnover, and almost by definition that has a negative impact on the customer experience."

Corporations that view contact centers mainly as cost, rather than profit, centers are missing the boat. "The talk about improving the customer experience is still aspirational for the most part," Jacobs says. "When companies want to cut costs, they still look at the call center first."

Rogers agrees, but warns of the strategy. "Using the call center as a quick way to make your quarterly numbers is a stupid thing to do," she says. "Focusing on first-call resolution rather than on length of call increases customer satisfaction scores enormously. Proper training, and encouraging people to treat customers as they themselves would like to be treated, reduced turnover by 20 percent in the first year [it was implemented] at FedEx."

So why don't more companies do that? "You got me," she says. "Things trickle down from upper management, and sometimes upper management got there by doing it the quick, ruthlessly efficient way, and it's hard to break those habits. But done right, like at Costco, you see increases in customer loyalty, employee retention, and shareholder value."

Rogers adds that a new book co-authored by Amazon's former vice president of customer service has done "a great job of delineating many of the problems companies have with the proper use of their call centers." Peppers & Rogers cofounder Don Peppers wrote about it in a recent blog entry, Must-Read New Book: The Best Service is No Service.